SEC Reviews Grayscale’s Proposal for Ethereum ETF Staking

• The SEC is evaluating Grayscale’s proposal to enable staking within its Ethereum ETFs, with a decision expected before May 26, 2025.
• Coinbase Custody will continue securing Grayscale’s Ethereum holdings, ensuring staked ETH remains under ETF management without pooling.
• The SEC’s review follows its acceptance of a similar proposal from 21Shares, reflecting increased regulatory interest in staking within ETFs.

The U.S. Securities and Exchange Commission (SEC) is evaluating a proposal that could permit staking within Grayscale’s Ethereum Exchange-Traded Fund (ETF). The agency acknowledged a rule change request filed by NYSE Arca on February 14, 2025. 

SEC’s Consideration of Staking in ETFs

The SEC has officially confirmed its review of Grayscale’s proposal, which aims to integrate staking within its Ethereum ETFs. The filing states that staked ETH would remain under the ETF’s direct management, ensuring assets are not pooled with external parties. This structure would allow the fund to receive staking rewards without altering existing custody agreements.

All staking operations for the ETF will be managed by the ETF’s sponsor according to Grayscale. The Ethereum holdings under current security procedures of Coinbase Custody will receive ongoing protection. The SEC conducts a public comment review process of which the initial 45-day period can stretch up to 90 days depending on regulatory needs.

Previous Efforts and Regulatory Considerations

Grayscale has been exploring staking within its Ethereum ETF for over a year. In March 2024, it introduced a similar staking model after Fidelity proposed a comparable structure. However, regulatory uncertainties delayed progress. The SEC has historically expressed concerns about staking, particularly its classification under U.S. securities laws.

Recent developments indicate that the SEC has been engaging with industry participants to examine staking models. According to journalist Eleanor Terrett, the agency has been seeking further industry insights on staking mechanisms. She reported that the SEC’s focus on staking may also impact its lawsuit against Consensys, which involved MetaMask’s staking service. The SEC had previously alleged that Consensys operated as an unregistered broker, a claim it has now dropped against Coinbase.

Other Crypto-Related Regulatory Developments

The SEC’s review of Grayscale’s staking proposal follows its recent acceptance of a similar rule change from 21Shares for its Core Ethereum ETF. This suggests the agency is considering staking within regulated investment products.

Additionally, Grayscale has filed for a spot in Cardano (ADA) ETF, which is currently under SEC review. Approval of this ETF would offer exposure to Cardano without requiring direct asset ownership. The SEC has also dropped investigations into Robinhood’s crypto unit and Uniswap, signaling a shift in its regulatory stance on some crypto-related activities.